Golden Eagle Usa, LLC v. Consolidated Industrial Corp.

NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition
is not citable as precedent. It is a public record.
United States Court of Appeals for the Federal Circuit
05-1334
GOLDEN EAGLE USA, LLC,
Plaintiff,
v.
CONSOLIDATED INDUSTRIAL CORPORATION
(doing business as St. Clair Plastics Company),
Defendant-Appellee,
and
HOLLINGSWORTH LOGISTICS MANAGEMENT, L.L.C.,
HOLLINGSWORTH LOGISTICS GROUP, L.L.C.,
HOLLINGSWORTH, INC., AND WADE R. WATERMAN,
Defendants,
RESTROOM ESSENTIALS, L.L.C.,
Defendant,
and
RICK WRIGHT,
Defendant-Appellant.
____________________________
DECIDED: January 4, 2006
____________________________
Before NEWMAN, LOURIE, and SCHALL, Circuit Judges.
SCHALL, Circuit Judge.
DECISION
Defendant-Appellant Rick Wright appeals the decision of the United States
District Court for the Eastern District of Michigan compelling this case to arbitration.
Golden Eagle USA, LLC v. Consol. Indus. Corp., No. 03-70229, slip op. (E.D. Mich.
Aug. 25, 2003) (“District Court Opinion”). Defendant-Appellee Consolidated Industrial
Corporation (doing business as St. Clair Plastics Company) (“Consolidated”) argues
that the district court lacked jurisdiction in the case because Plaintiff Golden Eagle USA,
LLC (“Golden Eagle”) did not hold “all substantial rights” in the patent at issue, U.S.
Patent No. 6,446,275 (the “‘275 patent”). Because it does appear that Golden Eagle
may not have standing to sue for patent infringement, we vacate the order to arbitrate
and remand the case to the district court so that it may make a determination as to
Golden Eagle’s standing to sue.
DISCUSSION
I.
Golden Eagle sued several defendants, including Consolidated and Wright,
alleging various state and federal causes of action. All state law claims were dismissed
by the district court, leaving only claims for infringement of the ‘275 patent and violation
of the Lanham Act (based upon alleged unfair competition and false representation).
District Court Opinion, slip op. at 6. The district court granted the motion of Defendants
Hollingsworth Logistics Management, L.L.C., Hollingsworth Logistics Group, L.L.C., and
Hollingsworth, Inc. to compel arbitration, despite the fact that many defendants being
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compelled to arbitration were not signatories to the contract which contained the
relevant arbitration agreement.
II.
In his appeal, Wright argues that the district court’s decision should be vacated to
the extent that it requires him to arbitrate any claims that he may have against any of
the other parties to the litigation. Wright complains that the court impermissibly bound
him to an arbitration agreement to which he was not a signatory. For its part,
Consolidated asserts that the license agreement at issue reserved the right to the
licensors to bring an action for infringement, while this suit was brought in Golden
Eagle’s capacity as the licensee. Consolidated contends that, under these
circumstances, the district court did not have subject matter jurisdiction over the patent
infringement claim because Golden Eagle was without standing to bring the claim, the
reason being that it did not hold “all substantial rights” in the ‘275 patent. The district
court failed to resolve this jurisdictional challenge before ordering arbitration of the
patent infringement claim.
III.
Standing to assert a patent infringement claim is a jurisdictional requirement that
must exist before a tribunal can address the merits of the claim. See Rite-Hite Corp. v.
Kelley Co., 56 F.3d 1538, 1551 (Fed. Cir. 1995) (stating that “the question of standing to
sue is a jurisdictional one”). “Only a ‘patentee’ can bring an action for patent
infringement.” Mentor H/S, Inc. v. Med. Device Alliance, Inc., 240 F.3d 1016, 1017
(Fed. Cir. 2001); 35 U.S.C. § 281 (2000). The term “patentee” is defined as including
“not only the patentee to whom the patent was issued but also the successors in title to
05-1334 3
the patentee.” 35 U.S.C. § 100(d) (2000). “A licensee is not entitled to bring suit in its
own name as a patentee, unless the licensee holds ‘all substantial rights’ under the
patent.” Textile Prods., Inc. v. Mead Corp., 134 F.3d 1481, 1484 (Fed. Cir. 1998). If a
licensee possesses “all substantial rights,” the licensee effectively becomes an
assignee and, therefore, a “patentee” within the meaning of section 281. Mentor H/S,
240 F.3d at 1017. “Ordinarily, ‘an exclusive licensee that does not have all substantial
rights has standing to sue third parties only as a co-plaintiff with the patentee.’” Id.(quoting Textile Prods., 134 F.3d at 1484). “Without the patentee as plaintiff, the
remedies provided in the patent statute are unavailable except in extraordinary
circumstances ‘as where the patentee is the infringer, and cannot sue himself.’” Ortho
Pharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026, 1030 (Fed. Cir. 1995) (quoting
Waterman v. Mackenzie, 138 U.S. 252, 255 (1891)).
Consolidated alleges that the license agreement reserved the right to the
licensors to bring an action for patent infringement and further alleges that Golden
Eagle sued only in its capacity as a licensee. Because Golden Eagle has not appeared
on appeal to justify its entitlement to sue, the matter is remanded to the district court to
make findings with respect to the issue of standing. To determine whether the license
agreement did or did not transfer “all substantial rights” in the patent, the district court
must “ascertain the intention of the parties and examine the substance of what was
granted by the agreement.” Mentor H/S, 240 F.3d at 1017. The case is remanded to
the
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district court for that purpose.1 Should the district court determine on remand that
Golden Eagle does not have standing to bring this patent infringement action, it must
dismiss the complaint. If the complaint is dismissed, the court obviously does not have
the authority to compel arbitration.
Each party shall bear its own costs.
1
Because Golden Eagle’s Lanham Act claim alleges that the Defendants
are manufacturing and selling products that simulate and contain distinctive design
features of the ‘275 patent, if the district court dismisses the patent infringement claim, it
must also determine whether the Lanham Act claim can survive independently.
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